Tax Info about Cannabis Business

How Much Do You Pay In Cannabis Tax?

Although the use of cannabis or marijuana is illegal in the United States, the federal government does not stop the individual states from de-criminalizing the use cultivation, distribution, and use of the drug. Because of this, there are many states in the country that have decriminalized this drug, although it is still highly-regulated. Here’s the link to the history of cannabis in a nutshell.

And because they are legal to use, you can expect that the price users pay for marijuana are infused with taxes. It’s just a matter of how much. On that note, how much do you pay in cannabis tax?

Well, that really depends on from state to another, however, we looked at the state of Colorado and found that medical marijuana, as well as products that are infused with medical marijuana, are only subject to 2.9% state sales tax on top of the 10% marijuana sales tax being imposed in the state. If Colorado is representative of all the other states in the country, the maximum amount that you pay in state taxes for cannabis tax is 13%. But of course, this does not include local government sales taxes. If you want to know how much you actually pay in marijuana taxes, you need to include the local taxes in the calculation as well.

For cultivators of the plant, they pay an excise tax, which is 15% in Colorado. The tax is levied on the quantity of the marijuana product multiplied by the average market price.

In the case of marijuana-infused products, there is no sales tax collected as products are only sold wholesale. However, you may need to file a wholesale tax license depending on your location and structure of your business.

The tax rates we mentioned above are for information purposes only and is only relevant in the state of Colorado. As we said earlier, the federal government has given all the states a free hand in the sale of marijuana, although the federal government requires it to be tightly regulated as it is classified as a Class 1 gateway drug, which means that it is highly addictive and that it can lead users to be addicted to stronger drugs like cocaine.

If you want to get specific information on the cannabis taxes in your state, make sure to do research and get the latest information from reliable sources. You should get your information from official sources like your state government’s tax office.